Within minutes of the start of trading the Dow Jones index had lost more than 50 points, and by late morning in New York it was 169 points lower at 7,677.57.
The fact that yesterday marked the quarterly "triple witching", when stock options, index futures and options on these futures expire together, had taken the index down 270 points at one stage.
It did not help that Nike issued a warning that its second- quarter earnings had fallen 20 per cent because of slower demand in both Asia and the US. On top of that, Ralph Acampora, a star analyst at Prudential Securities and formerly one of Wall Street's biggest bulls, predicted "troubled waters" for the market next year. He said most shares could fall 20 per cent or more next year.
Shares in London had already been sharply lower all day, and the instant dive in New York cemented it. The FTSE-100 index ended 148 points down at 5020.1, having shed as much as 183 points earlier. Other European markets were also down.
The UK gloom was embellished by a survey showing the fourth successive monthly decline in consumer confidence. The GfK survey is a reliable indicator of future retail sales, and confirmed other signs of gradual economic slowdown.
The round-the-globe tumbles started in Korea and Japan. Supporters of Kim Dae-jung, South Korea's new President, were out on the streets celebrating his victory but share prices tumbled 5 per cent as the Korean won lost 6.6 per cent of its value against the US dollar. Mr Kim, a long-standing opposition politician, has an image as an anti-business figure.
In Japan, the Nikkei-225 index plunged by 847 points, a fall of more than 5 per cent. The index closed at 15,314.89, its lowest for a year, having touched 15,170 earlier in the day.
This was mainly due to fallout from Thursday's collapse of the foodstuffs trader Toshoku, the fourth-biggest bankruptcy in post-war Japan. Toshoku was pushed over the brink by banks refusing to extend further credit in the face of its $4.16bn debt.
This indication of a tougher approach to over-extended borrowers by the banks sparked fears of further bankruptcies.Most other Asian markets also slumped. The biggest fall came in Hong Kong where share prices fell more than 3 per cent.Reuse content